State terminates contract with Healthcare.gov contractor over tax software system

North Carolina has already paid CGI $63.8 million for the tax-collection system

Public relations woes for Healthcare.gov contractor CGI continue to mount, as North Carolina has decided to terminate its contract with the systems integrator for a new tax-collection software system.

While the two sides say the termination was mutually agreed upon, in a press release CGI pointed out that North Carolina was able to collect an additional US$320 million in taxes from using the parts of the system, which is called TIMS (Tax Information Management System) that were already completed.

"TIMS is the result of a long-term information technology initiative that spanned multiple administrations," CGI said. "The project has returned more than three times its cost to the State in just over five years."

North Carolina has paid CGI roughly $63.8 million so far, and under the termination agreement will also give it another $5 million, said state Department of Revenue spokesman Trevor Johnson.

TIMS in its current form handles 28 of North Carolina's 34 tax types. The next project phase was supposed to add the remaining ones, which include major types such as individual income, Johnson said.

Originally, the next phase was supposed to be finished in October, but that deadline was missed and no new one has been set, according to Johnson. The state plans to use a legacy system to handle this tax filing season, he said.

The decision to cancel CGI's contract was a "tough" one, Johnson said. "Over the past year we've been looking at the project in detail, and the progress we were hoping for was not met."

Nothing has been finalized regarding the future direction of TIMS, he said.

CGI served as one of the main contractors for Healthcare.gov, the site where U.S. residents can shop for health insurance under the Obama administration's health care overhaul. The site was beset by performance woes upon its launch on Oct. 1, although it has since been stabilized.

Administration officials have come under heavy fire from lawmakers, who say they ignored warnings, including from CGI itself, that the site wasn't going to be ready for the Oct. 1 launch.

CGI's contract for Healthcare.gov won't be renewed after it ends in February.

A number of state-level health care exchanges developed by CGI have also experienced problems.

CGI's role in developing the health care sites and the subsequent fallout had nothing to do with North Carolina's decision to end the TIMS contract, according to Johnson.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Chris Kanaracus

IDG News Service
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